Friday, December 30, 2005

I give advice to a lot of entrepreneurs. This probably doesn't have much to do with any special wisdom, but more to my approach.

You see, I never ask entrepreneurs to sign any agreements or make any firm commitments up front. When I was starting my first company, a lot of people tried to get me to sign agreements granting them shares in exchange for providing advice, as a down payment on raising money, and any number of other things.

I did a lot of dumb things back then, but one of the smart things I did was to not sign any of those agreements.

Maybe they could have helped me. But I managed to start the company and raise $6 million on my own without them.

The reason that they missed out was that they forgot the cardinal rule of startups: First, kick ass.

Actually, you could also say, "First, create value," but that wouldn't be quite so punchy.

First kick ass. Then figure out how to claim the value you've created.

If you contribute to a successful company, there will be plenty of money and accolades to go around--in the Valley, success is usually binary--either you do or you don't. There isn't a lot of in between.

So what I tell people is, "I'll help you because I like you and I think your company has promise. And when we've been working together for a while, we'll figure out a way for me to be rewarded if you succeed."

I know more part-up founders, but since some of them have day jobs, I won't name names....

Of course, a part-up really isn't the ideal solution. As Ramit and I discussed at lunch today, the issue is paying the bills while waiting for a liquidity event.

That's why I dusted off an old concept of mine from the 90s: the personal IPO. Except in this context, I think it should be termed a personal VC investment.

Let's take a bright guy like Ramit, who can generate ideas and companies on a weekly basis. The problem is that he faces the choice of either taking a job to pay the bills (which would suck up all of his time), or finding enough freelance work to do the same (which sucks up all one's time in a different way). What he needs is his $50,000 per year.

Now imagine a rich investor who believes in Ramit. He can't invest in a company like a VC, because not all of Ramit's value creation methods involve companies.

What he needs is a way to invest money with a claim on Ramit's future value stream.

Enter the personal VC investment. For $50,000, he purchases a claim on 5% of Ramit's future value creation, up to, say, 10X his investment. If he believes that Ramit will find a way to create $10,000,000 in value for himself, he, the investor, can make $500,000.

Is this a good deal for Ramit? Maybe, maybe not. Depends on if he can convince someone to loan him the $50K on better terms (or just find a rich sugar mama). But it's certainly food for thought.

Sunday, December 25, 2005

Increasingly, I believe that people will apply portfolio strategy to their careers. Rather than investing 100% of their human capital into a single job, they'll diversify. A classic example is the artist who works a day job to pay the rent, but works on her art as well. In the old days, this was seen as unusual. Hopefully in 20 years, it will be the norm.

As usual, the folks at Linden Lab are ahead of the curve. Second Life now has a version just for teens, with "residents" from over 13 countries. Like many people, I've mused about how online worlds might teach the next generations tolerance by exposing them to people with different locations, beliefs, and lifestyles. I'll be curious to see what happens.http://ypulse.com/archives/2005/12/virtual_teen_en.php

"And this is where things got REALLY ugly. First off, Smith [Clerk's director Kevin Smith] was taken aback when Peters [super producer Jon Peters] asked him, in all sincerity, "‘Kal-El’? Who’s this ‘Kal-El’ guy you keep mentioning in the script?" Then the insanity really started to take over. Peters demanded that Superman be stripped of his red and blue suit, arguing that the suit was "too pink, too f@ggy." WB also demanded that Superman undergo a costume change, even ordering Smith to describe the soon-to-be-trashed red and blue duds as being "‘90s-style." So Smith was forced to have Superman ditch his red and blues (which he grudgingly deemed "‘90s-style") early on in the script and switch over to the black and silver suit from the "death of" story as his permanent gear (ironically mirroring Poirier’s earlier script). Peters also hated the FX in the 1978 Superman film with Chris Reeve, so he wanted to get rid of Superman’s ability to fly. So Smith tried to get around this by portraying Superman as a red blur while in flight, creating a sonic boom every time he took off (he took this from The Dark Knight Returns). Peters then told Smith to have Brainiac fight polar bears at the Fortress of Solitude, demanding that the film be wall-to-wall action. Smith thought it was a stupid idea, so Peters said, "Then have Brainiac fight Superman’s bodyguards!" Smith responded, "Why the hell would Superman need bodyguards?" Peters wouldn’t let up, so Smith caved in and had Brainiac fight the polar bears. Then Peters demanded that Brainiac give Luthor a hostile space dog as a gift, arguing that the movie needed a cuddly Chewbacca character that could be turned into a toy. Then, after watching Chasing Amy, Peters liked the gay black character in the film so much that he ordered Smith to make Brainiac’s robot servant L-Ron gay, asserting that the film needed a gay R2-D2 with attitude. Then Peters demanded that Superman fight a huge spider at the end of the film, which Smith refused to do—he used a "Thanagarian Snare Beast" instead. (However, Peters did manage to recycle his spider idea and use it in Wild Wild West.)"

Here's a good excerpt to whet your appetite:"You don't want to be an 800-pound gorilla. No such animal has ever existed. The average big daddy silverback tops out at about half that weight. And gorillas are not predators, but vegans, with an almost unlimited appetite for fruit and bamboo shoots. I once worked on a TV documentary about lowland gorillas; on an average day the dramatic episodes consisted of the alpha male passing gas, picking his nose and yawning. Then he did the same things, the other way around. Over and over. This is probably not the image a hard-charging executive wants to present to the public."

Douglas Rushkoff also picks up on the theme of fun:"Instead of relentlessly pursuing survival even after our survival needs are met, we must learn how to do things because they fulfill us— because they are, in a word, fun. Fun is not a distraction from work or a drain on our revenue; it is the very source of both our inspiration and our value. A genuine sense of play ignites our creativity, eases communication, promotes goodwill and engenders loyalty, yet we tend to shun it as detrimental to the seriousness with which we think we need to approach our businesses and careers."http://www.rushkoff.com/2005/12/get-back-in-box-final-thought-virus.php

Side note #1: Early this year, some friends of mine (I think they were drunk at the time), called me up because they wanted to collaborate on writing a book about the baby boomers. The title? "The Worst Generation." I still think it would be a good idea.

Side note #2: Marcos Najera, who is quoted extensively in the article, is an old acquaintance from Stanford. I'm glad to see that he hasn't sold out to the man!

The formula, which takes into account the amount of alcohol consumed, the lighting in the room, your vision, and the distance between you and the person you're looking at, can predict the degree to which your judgment of attractiveness is likely to be impaired.

At 100, Kathy Bates will look like Jessica Alba...which explains some of the "girls" my pal Kelso hooked up with in college.